In recent months, market analysts and industry observers have recited a litany of blunders to explain the decline and fall of Apple Computer. What they left out was an underlying force that led four generations of Apple management to make moves at every juncture that dissipated Apple's leadership of the personal computer industry the company created. And that underlying force is none other than Apple's longest-standing, most deeply held commitment: education.

Privately, I found that industry analysts agree that Apple's obsession with educational sales was a significant contributor to the company's problems. How big a contributor? "Fifty percent sounds right," says Tim Bajarin, president of the Santa Clara-based market research firm Creative Strategies. Steve Tirone, an analyst at International Data Corp. in Framingham, Massachusetts, puts it this way: "Apple's almost religious devotion to the education segment insulated the company from having to compete in the mainstream market. Avoiding competition made Apple increasingly uncompetitive.''

True, Apple's dominance in education - still roughly half of all school sales - is one of the few things the company's new management has to boast about in its current come-back ads. But that only proves the relevance of economist Kenneth Boulding's rule that "nothing fails like success."

At the heart of that rule - and the core of Apple's problem - is the inadequately appreciated economic concept of opportunity cost, in effect the cost of not doing something. Apple "lost" big on education because the resources spent pursuing school customers could have been deployed more profitably elsewhere. And
Apple's education sales force became a kind of tumor that spread throughout the corporate body
,steadily sapping the company's overall strength. The result: Apple lost the opportunity to become a global force like the Wintel complex that dominates more than 80 percent of the world's computer market. Here's how:

Apple's early and ongoing dependence on education for a large share of its sales and income led the company to commit too much of its resources to a market that will never be more than a niche in the overall computer industry, much less in the whole "information'' sector.

This persistent, misplaced focus devoured resources that might have been targeted on the "mainstream" market that Apple never really reached for, much less grasped.

Even the supposed legion of loyal future buyers failed to materialize. "Apple's strategy was based on the belief that kids hooked on one brand of computer would become devoted customers," says Harvey Long, a former IBM education industry consultant. "The problem is you have to wait far too long for a payoff."

Throughout the 1980s, schools and colleges accounted for about half of Apple sales; more recently, education provided nearly one-third of the company's revenues. And that doesn't count parents buying Apple products for their kids to use at home or sales to corporate training departments.

To protect and cultivate what seemed to be its base, Apple not only tailored its product line to its scholastic customers, but assembled a massive education sales force, which quickly became the tail that wagged the dog. "You have to understand that sales has always been the power base at Apple," one of the battalion of recently departed Apple executives says. "And education was by far the biggest power in sales."

How big? Right up until the end of the Michael Spindler era in February 1996, some 30 percent of Apple's total sales force was committed to education (and more to K-12 schools than to colleges). That was augmented by a roughly equal number of Apple-authorized "sales agents," who were guaranteed exclusive rights and a generous cut off the top.

For a long time, there was plenty of profit to go around. "In the mid-'80s, Apple was getting margins from 35 to 45 percent," says Bajarin, a widely respected Apple watcher. And back then Apple's sales were doubling nearly every year.

But rising sales and fat profits, short-term indicators of success, were leading Apple down the wrong strategic path. It's another aspect of opportunity cost: winning the battle and losing the
war.